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National Company Law Appellate Tribunal (NCLAT): While disposing of the appeal filed by Jet Airways (Offshore Regional Hub), a Bench of Justice S.J. Mukhopadhaya, Chairperson, and Justice A.I.S. Cheema, Member (Judicial), and Kanthi Narahari, Member (Technical), gave finality to the Terms and Conditions of the draft Cross Border Insolvency Protocol, entered into between the Resolution Professional of Jet Airways and the Dutch Trustee (Dutch equivalent of Resolution Professional — the administrator in bankruptcy of Jet Airways appointed by the Dutch Bankruptcy Court).

Jet Airways is subject to parallel insolvency proceedings in India and in Netherlands. In India, Corporate Insolvency Resolution Process has been initiated against Jet Airways. And in Netherlands, it has been declared bankrupt and a Dutch Trustee has been appointed to manage its estate. The NCLAT in its earlier order had directed the Resolution Professional, in consultation with the Committee of Creditors (“CoC”), to consider the possibility of a ‘Joint Corporate Insolvency Resolution Process’. By a subsequent order, the NCLAT had directed the Resolution Professional to reach an agreement with the Dutch Trustee and to extend cooperation to each other, pursuant to which the parties reached the instant Cross Border Insolvency Protocol in order to facilitate the proposed cooperation. 

The Terms and Conditions of the Protocol were filed by the parties pursuant to the directions given by NCLAT. Each party had accepted all the clauses of the proposed Protocol. However, they did not agree upon Clause 6.1.2, which relates to the participation of the Dutch Trustee in the meetings of the CoC as an observer. The Dutch Trustee was insisting that he shall be invited to the meetings of CoC as an observer, however, without any voting rights. Per contra, the Resolution Professional asserted that the Dutch Trustee shall not be entitled to participate in the meetings of the CoC. 

At the outset, the NCLAT made it clear that in the present case, the CoC had no role to play as the instant Protocol was reached between the parties pursuant to its directions. It also observed as unfortunate that in spite of the same, the CoC interfered with the matter and put its views to the Resolution Professional, which resulted in the difference of suggestions now before the NCLAT. 

The NCLAT noted that the Dutch Trustee is equivalent to the Resolution Professional in India, and therefore, as per law, he has a right to attend the meetings of CoC. However, to avoid overlapping of power between them, the NCLAT was of the opinion that the suggestion given by the Dutch Trustee should be adopted. Therefore, it directed the inclusion of the following clause into the Protocol:

      6.1.2.—The Dutch Trustee shall be invited to participate in the meetings of the CoC as an observer but shall not have a right to vote in such meetings.

The draft of the Cross Border Insolvency Protocol clause was, thus, made final. It was ordered that the same shall be treated as direction of the NCLAT and compliance of the order would be mandatory subject to other procedures required to be followed by the Insolvency and Bankruptcy Code, 2016. 

The NCLAT also set aside that part of the Judgment passed by the National Company Law Tribunal, Mumbai, dated 20-6-2019, whereby it was observed that the Dutch Court has no jurisdiction in the matter of Corporate Insolvency Resolution Process of Jet Airways (India) Limited (Offshore Regional Hub), and the consequential directions as given to the Resolution Professional in respect of offshore proceedings.

However, it was made clear that the NCLAT had not interfered with the order of admission of the application under Section 7 IBC filed by the State Bank of India against Jet Airways (India) Limited. Therefore, the Joint Corporate Insolvency Resolution Process will continue in accordance with the Insolvency and Bankruptcy Code, 2016. 

The appeal was disposed of accordingly. [Jet Airways (India) Ltd. (Offshore Regional Hub) v. SBI, Company Appeal (AT) (Insolvency) No. 707 of 2019, decided on 26-9-2019]

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National Consumer Disputes Redressal Commission, New Delhi (NCDRC): Justice V.K. Jain, Presiding Member, directed Jet Airways India Limited to pay a sum of Rs 1 lakh as compensation for failing to inform the complainant about the change of time.

Complainant is a doctor by profession, who booked an air ticket through Yahoo Tour and Travels on Jet Airways flight from Raipur to Kolkata. Later two flights were combined and the combined flight left Raipur at 10.40 a.m., i.e. 10 hours before the scheduled time of departure, recorded in the ticket issued to the complainant. As a result, the complainant could not appear in the examination he was supposed to appear. Aggrieved with the same, he approached the District Forum by way of a consumer complaint claiming compensation under several heads.

Jet Airways India Ltd. stated that the two flights were combined for commercial reasons and the same was duly intimated to Yatra Online Pvt. Limited and they were also informed in this regard by the call centre of Jet Airways India Ltd.

Yahoo Tours and Travels stated that the mobile number of the complainant having been given to Jet Airways, it was the Airline’s duty to inform the complainant about the re-scheduling.

District Forum allowed the complaint by directing them to refund the amount of Rs 38432 with a compensation of Rs 11 lakhs to the complainant. On being aggrieved with the same, they reached the State Commission where the compensation was reduced to Rs 1 lakh and the other direction remained the same. Finally, on still not being satisfied by the State Commission’s order, they reached this Commission.

NCDRC noted that, the tickets were booked through Yahoo Tour and Travels. The tickets were not booked by the complainants through Yatra Online Pvt. Ltd. Therefore, as far as Yahoo Tours and Travels is concerned, no evidence was present with respect to rescheduling of the flight was given to them. Yahoo Tour and Travels cannot be said to be deficient in rendering services to the complainant merely because tickets were booked through this agency.

As far as Jet Airways India Limited is concerned, it did not even claim to have intimated the change in the scheduled time of the flight to the complainant. Therefore, Jet Airways India Ltd. was clearly deficient in rendering services to the complainant due to non-intimation of the re-scheduling to the complainant.

Considering the facts and circumstances of the case, compensation was decided to be Rs 1 lakh along with simple interest @9% p.a. from the date of the order of the District Forum.[Yahoo Tour and Travels v. Dr Akash Lalwani, 2019 SCC OnLine NCDRC 166, decided on 07-08-2019]

Case BriefsHigh Courts

National Company Law Appellate Tribunal (NCLAT), New Delhi: The 3-Judge Member Bench comprising of Justice S.J. Mukhopadhaya (Chairperson) and Justice A.I.S Cheema (Judicial Member) and Kanthi Narahari (Technical Member), while pronouncing an order in regard to the “Jet Airways” setback addressed the following question:

“Whether separate proceeding(s) in ‘Corporate Insolvency Resolution Process’ against common ‘Corporate Debtor’ can proceed in two different countries, one having no territorial jurisdiction over the other?”

Further, noting the fact that separate ‘Corporate Insolvency Resolution Process’/ liquidation proceedings have been initiated against Jet Airways (India) Limited — ‘Corporate Debtor’, the one in India and another in Netherland, the point of determination as framed was,

“Whether by a Joint Agreement between the ‘Resolution Professional’ of ‘Corporate Debtor’ in India and Administrator in Netherland, as may be approved  by Appellate Tribunal, one proceeding in India can proceed for maximization of the asset of ‘Corporate Debtor’ and balancing all stakeholders, including Indian/Offshore/Creditors/Lenders”?

State Bank of India-Respondent 1, was represented by Ramji Srinivasan, Senior Advocate along with Counsel Karan Khanna.

It was directed to Respondent 1 that it may file a reply suggesting a procedure that may be followed in the facts and circumstances of the case, without any conflicting interest of stakeholders of both the countries.

Tribunal directed case for admission on 21-08-2019.

NCLAT also stated that during the pendency of the appeal, appellant administrator and Respondent 2 – ‘Interim Resolution Professional’ will cooperate with each other. It will be open to the appellant administrator to collate the claims of offshore creditors including ‘Financial Creditors’, ‘Operational Creditors’ and other stakeholders and forward their details to Respondent 2-‘Resolution Professional’ for purpose of preparing the Information memorandum with approval of ‘Committee of Creditors’.

Counsel, Sumant Batra who appeared on behalf of appellant administrator assured that-

  • Appellant Administrator will cooperate in the proceedings in India;
  • Will not sell, alienate, transfer, lease or create any 3rd party interest on the offshore movable and immovable assets of ‘Corporate Debtor’.

In respect to the above undertaking by an appellant administrator, the impugned order dated 20-06-2019 passed by NCLT, so far as it relates to the declaration that offshore proceeding is not maintainable, shall remain stayed.

  • Interim Resolution Professional of this country will ensure that ‘Corporate Debtor’ remains a going concern and will take the assistance of the (suspended) Board of Directors, paid directors and employees.
  • Person authorised to sign bank cheques may issue cheques only after Interim Resolution Professional’s authorisation.
  • Bank accounts of Corporate Debtor be allowed to be operated for the day-to-day functioning of the company such as for payment of current bills of suppliers, salaries and wages of paid director, employees’/workmen electricity bills, etc., subject to availability of fund.[Jet Airways (India) Ltd. v. SBI, 2019 SCC OnLine NCLAT 385, decided on 12-07-2019]
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Securities and Exchange Board of India (SEBI): A single member bench comprising of Santosh Shukla, Chief General Manager (Adjudicating Officer) exercised his powers under Section 15-I of the SEBI Act, 1992 read with Rule 5 of the Adjudication Rules and imposed a monetary penalty under Section 15-HB upon the defaulting noticees for non-compliance of SEBI directions.

The SEBI, vide its order, had issued certain directions against the noticees which include, inter alia, that the noticees shall disgorge the unlawful gain and interest thereon as directed from the date of listing of the IPO of Jet Airways. The noticees challenged the directions before the Securities Appellate Tribunal which set aside the SEBI order. Thereafter, the Supreme Court, in an appeal preferred by the SEBI, set aside the order of the Appellate Tribunal; consequent to which, the directions issued by the SEBI became final. The noticees defaulted in complying with the directions. In Recovery Proceedings, the disgorgement amount was paid by the noticees, however, they failed to pay the interest thereon at the rate of 10 per cent as directed by the SEBI.

The Adjudicating Officer, considered the allegations levelled against the noticees; their reply; and the material available on record. Notice was taken of the fact that the noticees defaulted in complying with the directions even after the Supreme Court decision. In the view of the Adjudicating Officer, the noticees had completely disregarded the directions of SEBI. Therefore, it was a fit case to impose penalty upon the noticees. Exercising his powers as mentioned hereinabove, the Adjudicating Officer imposed a penalty of Rs 2 lakhs. It was also observed that such defaults seriously compromise the regulatory framework and a lenient view in such cases would defeat the legislative intent of Section 15-HB of the SEBI Act. [Opee Stock-Link Ltd. and Ashok K. Bagrecha, In re, Adjudication Order Reference No. EAD-2/SS/VS/22/32-33/2018-19, Order dated  21-08-2018]